RealAdvice: Redefining Tax Dynamics in Commercial Real Estate
This episode of the Commercial Real Estate Daily podcast is brought to you by CRE Launch Pro. If you’re looking to take your investing skills to the next level with online courses, group coaching calls, and a community of other investors, head on over to www.CreLaunchPro.com
Episode Transcript:
Today, we're diving into a topic that's often overlooked but crucial in the world of commercial real estate - taxes.
For many commercial real estate owners, managing tax nuances while closing a deal can be quite a challenge. When owners lack the necessary information during underwriting, they could end up paying excessive taxes, particularly on intangible assets. These assets, not typically "taxable" by statute in most states, often face inappropriate taxation.
Intangible assets are the abstract elements like copyrights, trademarks, software, and other components associated with a business, whereas tangible assets include physical aspects like buildings, contents, and land. It's important to note that only real estate and tangible assets are taxable at state and local levels in most states, as Todd Jones, principal of Tampa-based tax advisory firm RealAdvice, points out.
Here's where things get crucial. Failing to identify and quantify intangible assets before closing could result in taxes being calculated based on the entire purchase price, not just the tangible aspects. Commercial real estate involves more than just brick and mortar; it's about capturing the full spectrum of assets that contribute value.
So, how can you avoid this potential tax pitfall? Jones stresses the importance of an irrefutable allocation appraisal. This separates non-taxable values from taxable real estate value, ensuring accurate taxes and avoiding unintentional tax fraud. This meticulous approach ensures you're on solid ground when it comes to tax obligations.
Let's dive into the practical impact. During a conversation with Bisnow, Jones shared how RealAdvice's methodology can transform the financial landscape. Taxes can be significantly reduced, freeing up cash flow for various expenses. This strategic maneuver optimizes margins and reshapes the financial dynamics of commercial real estate.
RealAdvice stands out from the crowd. Jones makes it clear that they're not competing with traditional property tax service providers. Their methodology, refined over nearly two decades, is powered by a sophisticated technology platform that benchmarks each value component against similar properties. This data-driven precision leads to informed decisions and accurate appraisals.
Addressing skepticism head-on, Jones highlights the legal ratification of their methodology in multiple court cases. From Disney to circuit court rulings, RealAdvice's impact is acknowledged by the legal system.
So, whether you're an investor, developer, or navigating the intricate world of commercial real estate, consider this: RealAdvice is redefining the landscape, not just in terms of taxes, but in the approach to transactions. It's a powerful tool that optimizes profits, drives meaningful change, and could potentially set a new standard for the industry.
This is Tyler Cauble, signing off.